People
Why governance, data, and the operating model now decide who controls critical capability
Joint ventures (JVs) in defense are shifting from occasional vehicles for market entry or offset delivery to becoming part of the core industrial architecture that determines who controls critical capability, data, and political access. For a defense OEM C‑suite, the question is now less "Should we do a JV?" and more "Which capabilities must we be willing to co‑own, under what control logic, and how do we keep optionality in a volatile world?"
In this environment, the decisive battleground is increasingly the operating model—how people, data, and decisions come together through shared digital tools and AI‑enabled ways of working—rather than the legal structure alone. JVs that do not get this right risk hard‑coding structural and digital constraints into the future industrial base.
Historic role of JVs in defense
Historically, defense JVs have been used to accelerate access to new geographies, satisfy local content, and offset rules, and share cost and risk on large, politically sensitive programs. Classic examples include pan‑European platforms (Eurofighter Typhoon, NHI, MBDA) where JVs and multi‑national structures underpinned workshare, technology pooling, and export reach.
The underlying logic was largely static: long program cycles, predictable national defense policies, and relatively clear boundaries between civil and military technology. In this environment, many JVs were designed once, then left to operate for decades with limited re‑engineering of governance, data, or operating models.
Classic pitfalls
The recurring failure modes in defense JVs have been well‑documented, but in today's environment they have become existential rather than procedural.
Key historic pitfalls (still relevant, but more dangerous now):
- Starting with the "obvious" partner before defining the precise strategic objective, leading to misaligned incentives and constrained future M&A options.
- Over‑indexing on legal structure and economics, under‑investing in governance, decision rights, and escalation mechanisms, creating deadlock on capital, technology, and export decisions.
- Politically driven workshare that fragments engineering, supply chain, and support, increasing cost and eroding performance—in turn making change painfully slow.
- Cultural friction between parent organizations (pace, risk appetite, compliance stance) that undermines program execution and safety or ethics standards.
- No clear evolution or exit logic, so aging JVs become barriers to portfolio reshaping when strategies, regulations, or threat pictures change.
In a world of contested technologies, FDI screening, and sanctions, these pitfalls translate quickly into regulatory breaches, export blockages, or loss of access to critical markets and funding.
What's changed: JVs in a dynamic geopolitical landscape
Today, defense JVs sit at the intersection of sovereignty, disruptive technology, and intense scrutiny of cross‑border control.
Key shifts that change the JV calculus:
- Sovereignty and FDI regimes: European and allied regimes now tightly police foreign ownership, technology transfer, and dual‑use components; JVs are often the only politically acceptable way for non‑domestic OEMs to secure market access while meeting "local control" expectations.
- Faster tech cycles: Defense technology (drones, counter‑UAS, AI, space, and cyber) moves far faster than traditional platform cycles, forcing the formation of JVs with start‑ups, digital players, and non‑traditional investors where governance and IP control are harder.
- Industrial resilience: Governments want redundancy and surge capacity, pushing primes to co-invest in regional capacity via JVs rather than rely on extended global supply chains.
- Data and AI as battlegrounds: The real power in many JVs now lies in who owns and can exploit operational, program, and lifecycle data, enabling AI‑driven planning, sustainment, and optimization that neither parent can easily replicate alone.
As a result, the most strategically exposed capabilities—integrated air and missile defense, combat air, advanced munitions, secure C2, and AI‑enabled ISR and autonomy—are increasingly likely to sit in JV or JV‑like collaborative structures by design.
What "good" now looks like
The frontier JVs in defense look quite different from legacy constructs: They are designed around operating models, data, and optionality, not just equity splits.
A contemporary illustration is the 50/50 joint venture announced by Leonardo and Rheinmetall in 2024 to industrialize and commercialize Italy's next‑generation main battle tank, aligning national sovereignty, European cooperation, and industrial renewal while remaining subject to EU competition and export‑control scrutiny. Similarly, new joint ventures in counter‑UAS, such as the planned Indra–Escribano JV for advanced C‑UAS and directed‑energy systems, show how JVs are now being used to integrate complementary technologies, deliver sovereign effects, and respond to live battlefield lessons at speed.
In all cases, the real integration test is less about nominal workshare and more about whether partners can operate on a single, trusted digital backbone—shared design, program, and sensor‑fusion environments with one view of performance, risk, and readiness.
Characteristics of high‑performing "next‑generation" defense JVs:
- Clear strategic thesis: Explicit on which capabilities and data sit inside the JV, why JV beats prime‑sub or alliance, and what success means for each parent and for governments.
- Deliberate partner choice: Selection based on complementary capability, market access, and political fit, not just brand or short‑term gap filling.
- Integrated, AI‑ready operating model: One set of critical processes (program control, engineering, supply chain, or in‑service support) supported by a single source of truth for data, with joint centers of excellence and shared digital platforms that make AI applications scalable rather than experimental.
- Governance tuned to speed and risk: Clear decision rights, calibrated reserved matters, and proactive risk and ethics oversight that meet the highest‑standard regulator in the chain.
- Built‑in evolution paths: Defined triggers for re‑basing workshare, adjusting scope, or exiting/combining, so the JV can move as fast as the threat and political environment.
Digital ways of working as the real integration test
In modern defense JVs, the real integration test is no longer just workshare or legal control; it is whether the parents can operate off a single, trusted digital backbone. That means shared program tools, a common data model, and harmonized KPIs that give both boards and customers one view of cost, schedule, risk, and readiness.
Because JVs must combine different organizations, security regimes, and engineering traditions, the operating model only works if it is underpinned by deliberate, shared digital choices. The most effective ventures start by designing a single source of truth for technical, commercial, and in‑service data, then layering shared digital platforms over parent systems to provide real‑time visibility. This allows AI to be applied to risk‑based program control, predictive maintenance, and disruption sensing in the supply chain—benefits neither parent can easily achieve alone. Where this does not happen, duplicated systems, incompatible data standards, and conflicting decision rights become hard‑wired, permanently capping performance.
This inevitably creates a more fluid, rather than static, environment in which IP ownership must be shared more flexibly. In the defense sector—where companies may be partners in one context and competitors in another—this demands a fundamental shift in traditional behaviors, but done well could lead to faster and more advanced IP than either party would develop individually.
AlixPartners has distilled key lessons and synthesized them into a check list for C-suite teams below, as well as devised a playbook to deliver fast-track successful JV implementation.
AlixPartners C‑suite JV checklist for defense OEMs
1. Strategy and scope
- Is there a one‑sentence JV thesis (capability, market, political outcome) that clearly beats prime‑sub, alliance, or acquisition?
- Have we clearly ring‑fenced what IP, data and capabilities go into the JV—and what must stay under sole control?
- Does this structure improve, not constrain, our ability to reshape the portfolio in 5–10 years?
2. Partner and politics
- Do partner incentives stay aligned across success, delay, overruns, and sanctions or export shocks?
- Are key governments, FDI/export‑control authorities, and customers comfortable with ownership, control, and data location from day one?
- Can we live with our partner's culture on speed, compliance, ethics, and risk when things go wrong?
3. Operating model and data
- Is there a designed, end‑to‑end operating model (not two parent processes bolted together) for program, engineering, supply chain, and support?
- Will the JV operate on a single, secure data model with clear ownership, access, and cyber rules, enabling real AI use cases (i.e., in schedule control, sustainment, and supply‑chain resilience) and organizational flexibility?
- Are we funding joint tools and centers of excellence rather than recreating both parents inside the JV?
4. Governance and risk
- Are decision rights and reserved matters tight enough to avoid deadlock but strong enough to protect mission‑critical and ethical risks?
- Do boards, committees, and reporting satisfy the toughest applicable regulator and customer?
- Is there a tested playbook for security incidents, compliance failures, and conflicting national instructions?
5. Economics and exit
- Do risk, capital, and upside still look fair under downside scenarios, not just the base case?
- Are management incentives tied to JV value (availability, capability, cost, cash) rather than parent P&L gaming?
- Are review points, reshape triggers, and exit routes (buy‑out, sell‑down, merger, wind‑down) realistic without jeopardizing sovereign capability?
In the next decade, the winners in defense are likely not to be those who simply form joint ventures, but those who deliberately design their future business around them.
For a deeper conversation about the challenges and solutions associated with this topic, contact:
Eric Bernardini
Executive Partner & Managing Director, Aerospace, Defense, and Airlines
[email protected]
Stefan Ohl
Global Co-Leader, Aerospace, Defense, and Airlines
[email protected]
David Wireman
Global Co-Leader, Aerospace, Defense, and Airlines
[email protected]
Contact the authors:
Diane Shaw
Partner & Managing Director
[email protected]
Sita Sonty
Partner & Managing Director
[email protected]
Harry Malins
Partner
[email protected]
